Will Thailand Plus take away Vietnam’s spoils in US-China trade war?
- Bangkok hopes tax breaks offered in its Thailand Plus stimulus package will lure firms from China hit by higher tariffs
- Doubters say it will still struggle to outshine its low-cost labour neighbour Vietnam as the best port in a storm
Bangkok hopes the move will offset a downturn in exports and tourism, but analysts caution that tweaking tax rates may not be enough to eclipse the draw of Vietnam’s low-cost labour and free-trade agreements with global partners like the European Union.
“The new package covers comprehensive measures that will enhance Thailand’s attractiveness as an investment location, including investment-acceleration incentives, fiscal measures supporting Stem [science, technology, engineering, mathematics] manpower development, deregulation, and improved pre- and post- investment services,” said Kobsak Pootrakool, deputy secretary general to the prime minister, in an official statement from the board. “We are confident that these incentives will make us more competitive than Vietnam.”
The two countries are not the only ones in the region competing for foreign investment amid a global slowdown. At the beginning of this month, Indonesia announced plans to cut its corporate tax from 25 per cent to 20 per cent starting in 2021, and for a time-limited rate of 17 per cent for companies listing shares. It has also vowed to carry out an overhaul of the value-added tax, income tax and general taxation.
Kobsak said Thailand’s tax incentives were now “not less than” Vietnam’s, but he admitted that the country was still playing catch-up when it came to free-trade agreements.